Evangelicals And The Housing Boom

April 1, 2009

Via Felix Salmon, Zubin Jelveh has a great post over at the Times economics blog about whether evangelicals might have restrained the housing bubble (a question that seems to have been designed almost specifically to appeal to my household*). As Jelveh summarizes the argument in a new paper by IMF economist Christopher Crowe:

Many evangelicals ... believe that the end of the world and the second coming of Jesus Christ will be marked by great calamity. ... Mr. Crowe [the author] proposes that evangelicals are more likely to spend money when times are bad for nonbelievers. If you’re with Mr. Crowe, then it’s not a great leap to think that evangelicals interpret bad-news events as good news.

To test this theory, Mr. Crowe looked at home prices before and after 9/11 and found that they fell sharply in non-evangelical areas but actually rose in evangelical ones. He next turned to the Rapture Index, which purports to track how close the end of the world could be. Mr. Crowe investigated how changes in the index matched up with home prices and found that up to 90 percent of the difference in price changes between evangelical and non-evangelical areas could be correlated with the Rapture index.

Interestingly, I remember hearing something similar about evangelicals and the Israeli economy--that spending by evangelical tourists (most of them Americans) was one of the few bright spots during the dark days of Palestinian terrorism in 2002 and 2003.